What America MUST DEMAND Of Our Politicians (Labor)
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-01-22 18:29
by Karl Denninger
in Consumer
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What America MUST DEMAND Of Our Politicians (Labor)
 

If you have not read this article, you need to.  It is presented as a "why the middle class is squeezed" in America piece, with the premise being that we were once great enough to be the world's manufacturing powerhouse but we no longer are and this is our fault.

Wrong.

Let's start with this:

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

Ok, so why not?

Is it because the Chinese are smarter?

Is it because we lack the ability to perform the manufacturing?

Is it our tax structure?

In short, is it our fault?

In a word: NO.

This, my friends, is why:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

It's easy to be "speedy" and "flexible" when you effectively own your "employees" as slaves!

How many of you caught the paragraph up there?  At midnight, without warning, the factory foreman went into dormitories in which the workers were sleeping, roused them and effectively compelled them to work a 12-hour shift with nothing more than a biscuit and cup of tea.

Did you get that?  These are not employees, they're slaves.

After all, were they employees they'd be working for great wages, right?  Uh, maybe not.

The facility (Foxconn) has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

The unimaginable part is that these employees are slaves.  A communist nation can get away with this sort of thing.  They can, and do, prevent the organization of those employees into a consolidated negotiating block, imprisoning or simply "disappearing" anyone who tries.  A coordinated strike is impossible, meaning that labor has no balance of power with capital.

This power does not come from natural economic forces.  It literally comes from the barrel of a gun.

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

Are you reading this America?  How do you square college costs escalating at double or more the rate of inflation and crushing levels of debt with the premise of a technically-trained workforce?  You can't.

....in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

Free market principles are fine right up until people start using slave labor on an effective basis, along with environmental arbitrage, as the means of "progress."  And let's not mince words: That is exactly what has happened.

Absent intentional interference in our monetary and economic system on both sides of the Pacific what happened can't be sustained.  Americans cannot buy iPhones without money to spend on them and they cannot have those funds absent "free credit" and ponzi bubbles without good jobs.

In other words, absent the intentional distortion that is generated by massive deficit spending by state, local and federal governments what happened can't as it immediately self-corrects.  Henry Ford understood this -- which is why he paid his employees enough so they could buy one of his cars!  He not only drove down the cost of building a car he increased the modestly-skilled laborer's wage so he could afford one.  He took the efficiencies he found in automation and manufacturing and allocated some of it to labor so that the total economic surplus would be recycled back into the purchase of his, and others, products.

That's what productivity improvement is, it's what powers the natural deflation that is the ordinary state of all economies over time, and it brings common improvement in the standard of living for the majority of the people.

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What Apple (and other companies) want are employees that are housed in dormitories, can be roused at midnight to work a 12-hour shift on demand fueled with only a cup of tea and a ten cent biscuit, paying them $17/day.

THAT is what Apple and these other firms demand.

It is absolutely true that America cannot fill that demand, because at one dollar an hour you can't manage to put the food on your table for a family of four, say much less pay rent, electricity or gasoline for your car to get there and back!

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

That's absolutely true.  But America remains a monstrously-large market and America has no obligation to let you bring products into this nation without tariff or impost while you exploit the existence of authoritarian governments and environmental arbitrage.

A 100% tariff on all of Apple's foreign-produced or assembled products should make the decision easy -- is this really about the availability of a workforce, in which case it would not matter to Apple, or is it really about state-sponsored enslavement and exploitation?

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Free
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Quote:
or is it really about state-sponsored enslavement and exploitation?


Or about the US giving the store away?


This is why I refuse to buy any Apple product. But why stop with Apple?

A 100% tariff on ANY Chinese produced product might work, as well.

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Abn0rmal
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If China had a free market some other company would go in there and steal all of Foxconn's best employees by offering them $1.50 per hour, forcing Foxconn to either increase wages or improve working conditions and so on until the price of labor rose to its equilibrium value. The low wages in China are a direct result in of the Chinese government directly and indirectly restricting the number of employers and thus the demand for labor.
Fraudster
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Quote:
That's absolutely true. But America remains a monstrously-large market and America has no obligation to let you bring products into this nation without tariff or impost while you exploit the existence of authoritarian governments and environmental arbitrage.


What is outrageous is that our elected officials refuse to address this and act appropriately, while the economic machinery of this country is gutted!smiley

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"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte

"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
Blueskies
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It is ABSOLUTELY about state-sponsored enslavement and exploitation.

Although not quite the same thing as AAPL... a few years ago I was working for a publishing company and a good part of my job was typesetting (or OCR scanning) many of the old titles that we only had film to print from, to a digital file so we could go direct to plate. Ummm, my job eventually got cut, they sent all that work to India. Lots of super cheap typesetters in India. The same publishing company printed all of their high end coffee table books in China. The U.S. printers just couldn't compete with the Chinese bids.



Otiswild
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Quote:
A 100% tariff on all of Apple's foreign-produced or assembled products should make the decision easy -- is this really about the availability of a workforce, in which case it would not matter to Apple, or is it really about state-sponsored enslavement and exploitation?


That goes for all the other goods and services outsourced to such regimes, not just Apple. Whether the products be iPhones, paralegal services or tube socks.

Cuz it's either tariffs or war, I don't see any other way to increase the value of labor short of artificial imposement of costs or "removing the surplus labor" (aka atomic war).
Abn0rmal
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Otiswild wrote..
I don't see any other way to increase the value of labor short of artificial imposement of costs or "removing the surplus labor" (aka atomic war).
I guess not artificially restricting the number of people who are allowed to bid on it is out of the question?
Bluebird
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There was an interesting program on the radio

1/6/12 This American Life: Mr. Daisey and the Apple Factory

Mike Daisey was a self-described "worshipper in the cult of Mac." Then he saw some photos from a new iPhone, taken by workers at the factory where it was made. Mike wondered: Who makes all my crap? He traveled to China to find out.

Mike Daisey performs an excerpt that was adapted for radio from his one-man show "The Agony and the Ecstasy of Steve Jobs." A lifelong Apple superfan, Daisey sees some photos online from the inside of a factory that makes iPhones, starts to wonder about the people working there, and flies to China to meet them.

click for the link to the audio...appx 1 hour
http://www.thisamericanlife.org/radio-ar....

Bertdilbert
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How exactly are they slaves? Are they voluntarily working or are they forced at gunpoint?

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Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro.
Rich_lather
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I was going to post the same, Bluebird. That was a chilling podcast and certainly worth a listen.
Duc888
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I don't want to sound like a ****ing SAGE... but me and my blue collar buddies were ON TO THIS **** ..............20+ ****ing years ago.

Back then the transition was being made from blue collar manufacturing jobs to white collar computer jobs. Well....we all said "listen you ****ing uppity white collar pooter geeks.....sooner or later your time will come". Truth be told the white collar computer sector has not had to weather the storm like their blue collar brethren....but....eh..... things aint been so rosy for the pooter geeks as of late with the H1B visa *****s and such....floating onshore.

As recently as ten years ago I was being lambasted on that **** bag site called FreeRepublic.......with paid shills hammering me from all directions telling me the jobs of "manufacturing buggy whips were done with".

**** Freerepublic... (that's for a PWD rant in the bar at a later date)

20 years ago we were joking that the only time this **** would stop was when lawyers jobs were being offshored.


America can't manufacture?

**** you.

Two words.

Liberty ships.


oh yea, while I'm 1/2 a bottle deep into screw cap wine....**** that ****-stain Newt who hammered everyone with GATT and NAFTA and all the other extra constitutional "deals".....I hope some day he gets beaten to a bloody pulp with all 10,000 pages of that sell out ......and at the same time gets his brains squashed like a ****ing grape under the wheels of a rickshaw.

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...burp

Crzymorse
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Two points.

1) The congress passed a federal minimum wage. There are many people in the US unemployed and not making $17 a day. Maybe we should repeal the minimum wage.

2) Our environmental regulations are so stupid. I bet you didn't know we can't build a nuclear weapon in this country anymore. Yet we let mercury and lead laden food and toys in from Asia everyday... stupid stupid stupid....
O.jeff
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Popular opinion is turning against free trade.

http://www.people-press.org/2010/11/09/p....

At least 55% of people now recognize that free trade agreement lead to job losses in the USA, and 45% recognize that free trade agreements cause reduced wages in the US. Even in spite of these facts, though, the public has pendulummed back and forth on support--as of Nov 2010, 44% were against and 35% were in support.

I wish they would ask how much extra you would be willing to pay for a "Made in USA" product. And, it would be interesting to see how many Americans would support paying, for example, a 30% sales tax on imported goods and services--assuming this tax were made revenue-neutral by reducing the corporate and individual income tax.

o.jeff
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KD wrote..
THAT is what Apple and these other firms demand.

Taking advantage of something which happens to be available is not the same as demanding it to be created.

Without Apple and the various other western companies which produce goods in China, all these "Slaves" would still be subsistence farmers, earning about $1/day instead of the $17/day they earn now.

Are they free to walk out of these factories and return to the rice paddies that they grew up on? Yes they are. Are they free to emigrate? Yes they are. So are they slaves? IMO, they are not.

-Uwe-

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“Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience.” - John Locke
Genesis
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No they're not -- in many cases those paddies have been bulldozed over and if those employees attempt to organize -- that is, use the alleged human right of free association -- they are literally shot.

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I don't care if it makes sense -- only if it makes money. -- Me
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What part of "shall not be infringed" was unclear?
Duc888
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I have no problem paying 50% more for an Iphone. Actually I'd never buy one.,..they're just too ****ing ghey.....I'm an open source dude.


But here's the deal. If more Americans make a decent wage... then more Americans will be able to afford my services. It's that simple. In my business....since 2008 it's as if ALL OF MY CUSTOMERS under my age (47) have been abducted and shipped off to some desert island. I've lost 60% - 70% of the businesses I had established accounts with in the previous 20+ years!

You suck manufacturing out of a country and this bull**** service economy is what you're left with. Tariffs would be a good thing... but you know... how many 20 year olds are learning to be CNC operators?

These meterosexual ****s wither and die at the thought of getting a speck of grease (machine oil) under their manicured fingernails.


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...burp
Mac
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I'm so damned frustrated with the Government I'd like to see a nuke on DC! There are simple answers to these problems, but what they take is a desire to put AMERICA first and tell the rest to go screw themselves. Here's a fifteen-point plan to sort the country out. First, an executive order that all businesses in the US have 90 days to implement e-verify. Second, another executive order that any business owner having illegals working for him after that 90-day period gets a $50,000 fine per illegal per day with a two-year jail term MANDATORY for the CEO and all members of the Board of Directors. Third, all H1-B visas revoked immediately, the process ended, and all participants given two weeks to leave the country. Fifth, end family reunification rules for immigration. In fact, end all permanent immigration for anyone from anywhere that does not have at least a bachelor's degree in a STEM discipline and limit the total to 100,000 per year. Sixth, tariffs of 30 per cent on EVERYTHING from China except those things we prohibit in their entirety. Seventh, ram a balanced budget amendment through Congress starting in 2013 with NO tax increases. Nothing but cuts. 30% tariff on all imports starting immediately to cushion the shock. Eighth, give the oil companies blanket permission to drill anyplace they think they can find oil if the landowner will come to terms. All areas of the offshore shelf to be immediately open to exploration and production. Ninth, make Puerto Rico independent within three months and ban any further immigration from there. Tenth, institute "loser pays" rules for all Federal lawsuits and make Federal judges PERSONALLY liable for the court costs if their rulings are countermanded by a higher court. Eleventh, cut unemployment insurance to no more than 52 weeks. Twelfth, deport all illegals in the U.S. and state prison systems at the expense of their national government. Present the criminal's government with the bill and tell them failure to pay within 90 days means ending of diplomatic relations and seizure of all assets necessary to obtain repayment up to and including their embassy. Thirteenth, overhaul the tax code. Flat tax starting in 2016--everyone pays 15 percent. No exemptions, exceptions or optouts. Fourteenth, end EBITDA. You incur a bill at the hospital, it's yours. No cost-shifting and no paying for those who cannot pay themselves. Medical care is cash on the barrelhead for those without insurance. Fifteenth, end the EPA, TSA, BATFE and the Department of Education immediately and ban their employees from any further employment within the US Government.

If we did those things, we could sort out our major problems and give ourselves enough time to get our money problems fixed. We grow enough food here to feed ourselves very well and we used to make a lot of the world's best machinery. We still could if we weren't competing with slaves on price. America's current crop of politicians have sold us down the river to foreign and multinational interests. Our biggest problem is our failure to follow the principles of economic nationalism and put America first. Everyone else in the whole world does that but us. It's twenty trillion dollars past time that we started doing that as well. AMERICA FIRST--SCREW THE REST!
Free
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Mac, please use paragraphs ;)

I'd like to be able to read what you wrote with some white spaces in between.

Thanks for helping this girl who needs new glasses!

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Duc888
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Quote:
No they're not -- in many cases those paddies have been bulldozed over and if those employees attempt to organize -- that is, use the alleged human right of free association -- they are literally shot.


How true.

I used to have a web link to the pollution that is happening in China. I swear to Christ if it didn't bring a tear to your eye seeing how some of these people live.... then you (not directed at you Karl) must be a total psychopath. At some point we are indeed "our brothers keepers". So ****ing shoot me for saying that.


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O.jeff
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To the best of my knowledge, NOT ONE SINGLE CANDIDATE for president has so much as uttered one single sentence that hints or even suggests that possibly free trade is bad policy that might possibly be harming Americans. Ron Paul does not count--his opposition to NAFTA/WTO is based on the fact that he thinks government should not regulate trade at all! (He might be right: if we had hard money, it would force the trade accounts to be equalized; and, with hard money and no Fed, borrowing by the gov't would be much tougher.)

By the way, our "representatives" passed not one, not two, but THREE free trade agreements last year!!!

"The House voted to pass the Colombia measure, the most controversial of the three deals because of concerns about the treatment of unions in that country, 262 to 167; the Panama measure passed 300 to 129, and the agreement concerning South Korea passed 278 to 151. The votes reflected a clear partisan divide, with many Democrats voting against the president. In the Senate, the Colombia measure passed 66 to 33, the Panama bill succeeded 77 to 22 and the South Korea measure passed 83 to 15. Senator Harry Reid of Nevada, the majority leader, voted against all three measures. "


Genesis
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The only one that's even close to defensible is the South Korean deal, and even that ignores the wild disparity between well off and not in that nation.

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Duc888
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Mac:
Quote:
I'm so damned frustrated with the Government....


The people you vote for..... the people you give tacit approval to over the micromanaging of your life, do not have your best interest in mind.

Mac, I think we need to regain our strength. We need to "argue" that our way (true capitalism) and not this bull**** corporatocracey is the best economic formulae to date. The problem is we are so weakened....our valid system has been chipped away at and whittled down to the nub in such a fashion that it is unrecognizable.

We are amongst the laughingstock of the world do to the parasitic relationship between the banksters / politicians and the food source, the wage slave / taxpayer.

There is absolutely no more rule of law at the top. It is a total free for all. The "brain" is dead and now we the body will wither and die because of it.

Who broke the economy? Stop focusing on the symptom(s) and look at the cause.

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...burp

Bozonian
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All this whining about the government isn't going to do anything at all, especially from people who will elect anyone else but Ron Paul, who are all corporate puppets.

The only thing you have control over is yourself and the only solution to the problem lies with yourself and what you can do something about.

I suggest you do what your instincts tell you to do in order to survive at this time, in this environment.

Solutions that depend on everyone "doing the right thing" never work.

I'm shocked that any of you are looking for a government solution. The government always targets the wrong problem, the wrong cause and the wrong solutions, always.

By blaming "China" you are admitting that China is better than the U.S, that slave labor is superior to freeman labor. Do you really believe that?


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Forget about blaming, fighting with, or crediting other people. The only real challenge in life, is with yourself. -- Me

Everything I write is my opinion and not to be considered proven fact. Nothing I write should be considered financial advice.

Wakeupcall
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According to the audio link that Bluebird posted, the employee turnover rate at the tech companies is from 10-20% MONTHLY (approx 49min). So, these people can and do have the option of leaving & finding other jobs, no?

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Free
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And Boz, your suggestion is?

Mine is voting with my wallet.

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"Don't believe everything you hear and only half of what you see."

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